In a recent letter to investors, Cathie Wood, CEO of ARK Investment Management, defended the strategy of the firm’s flagship fund, the ARK Innovation ETF. Despite recent losses and net outflows of over $1.8 billion in the last six months, Wood remains confident that the fund’s fortunes will reverse once interest rates fall.
The ARK Innovation ETF has been on a rollercoaster ride, with a 67.6% gain in 2023 followed by a more than 12% loss so far this year. This is in contrast to the S&P 500 index, which has seen a gain of 16.9% in 2024. Wood acknowledged that the macro environment and some stock picks have challenged their recent performance, but she emphasized their commitment to investing in disruptive innovation.
As of May 31, ARK’s top investments were Tesla, Coinbase, and Roku. Wood believes that many of the fund’s holdings are in “rare, deep value territory” and expects significant profits once interest rate cuts begin. She anticipates returns similar to the fund’s 152.8% gains during the initial stages of the pandemic.
Despite a report from Morningstar calculating losses of $14.3 billion in shareholder value over the past 10 years, Wood remains optimistic about the future. She sees artificial intelligence-related investments as key to future returns, expecting a more diverse set of winners in the market.
In conclusion, Wood is resolute in her belief that staying the course will lead to meaningful profits in the next few years. ARK Investment Management did not immediately respond to requests for further comment on the letter.